Freddie Mac and Fannie Mae are now offering unemployed homeowners an extended forbearance, reducing or suspending mortgage payments for up to a year. This is an increase from the current program in which homeowners can apply for 6-month forbearance.
This program is slated to start on February 1, 2012. Freddie Mac and Fannie Mae will allow companies that collect mortgage payments to give borrowers up to a 12-month break on their mortgages, up from a current level of six months. Mortgage companies will now be able to automatically extend the borrower’s forbearance for six months and expand it to a year with Freddie Mac’s or Fannie Mae’s approval.
Tracy Mooney, a Freddie Mac Senior Vice President, stated, “These expanded forbearance periods will provide families facing prolonged periods of unemployment with a greater measure of security by giving them more time to find new employment and resolve their delinquencies. We believe this will put more families back on track to successful long-term home ownership.”
However, the mortgage balance is not reduced during this time, so borrowers will still owe the payments they missed and the loans will continue to accrue interest. Look at it this way: You’ve paid a $150,000 at 6% mortgage note down to $100,000. Assuming you take the full year of forbearance, your payoff will increase approximately $6,000. Still, it’s better than losing your home, and hopefully once your employment situation changes, you can try to make up lost ground.
Whether it is worth it to take advantage of this program is a decision depends on your circumstances. If you’re having financial problems, it’s best to meet with an attorney in your area to discuss your rights and responsibilities. Get all the facts, and explore all your options before making any decisions.